Creativebias Helpsheet: Conducting and Using Market Research - Crafts

Conducting and Using Market Research

A guide for Designer-makers and Crafts-based businesses

Introduction

Conducting market research is vital for any business. Through market research you can find out who your potential customers are, what they want and how much they're prepared to pay for it. Market research is also the key to understanding your competitors' strengths and weaknesses, and the opportunities presented to you by the business environment in which you operate.

Understanding and acting upon information that market research generates can help to ensure the future success of your business. Besides being a crucial startup tool, market research should be used continually once your business is established. It will help you keep up with the latest consumer trends and avoid being overtaken by competitors.

Information gathered is either:

• primary research - information that you collect from people yourself and then analyse; or
• secondary research - information already gathered by someone else and published as a report or an article.

This research will be:

• quantitative - multiple choice or yes/no questions like 'Do you own a car?', providing facts and figures about marketplace trends; or
• qualitative - open-ended questions encouraging in-depth discussions and opinions.

Market research doesn't have to cost a fortune. Here are some suggestions for new crafts businesses with small budgets.

Step 1: Customers

First, define your typical customers in as much detail as possible. Get family and friends to help - they may suggest things you wouldn't have thought of.

Consider things like:

• Are they male or female? Married? With children? What approximate age are they?
• Do they own their home or rent? Where do they live? Do they need to visit you to view products or discuss requirements before purchasing, or are website/brochure illustrations enough?
• What do they do for a living? How much do they earn? Are they bargain-seekers or big spenders? Conservative or trendsetting?
• How much do they usually spend on products like yours each month?
• What do they do outside work? What are their interests and hobbies?

Your definitions may change as your research progresses; this is all part of the process. Record your changes and note down why you changed your mind. You can then use secondary research to identify how many people fit the profile of your ideal customer, and how many other businesses are competing with you for these people's money. Have a look at www.upmystreet.com for information about people and businesses in your area.

As soon as possible, start collecting contact information from customers. Offer an incentive such as a newsletter to encourage people to give an address. Any additional information you can get from people will be useful to you. Talk to your customers, try to find out a little about their background. Take note of what they like or dislike about what you offer, and how they react to pricing.

If you have a client list, send out a short survey via email or post (with prepaid return). Or put a few carefully chosen questions on the back of price tags. The number of returned surveys you receive may be low (even if you offer incentives such as vouchers or prize draw entries) but any surveys you get back will help you to understand your target market.

HOW TO ... conduct a survey

• Decide whether your survey will be by email, mail, telephone, on your website or in person.
• Keep questions simple and specific. Include some quantitative questions to give statistical information; and some qualitative questions to allow respondents to comment in their own words.
• There are computer programmes such as Excel that can be used to analyse your data.

TIP: If you're stuck for people to survey, find out which enthusiast magazines sell their subscriber lists. Buying a subscriber list gives you contact information for many potential customers in your area of interest. If you're a student, ask your place of education if you can put up posters advertising for potential respondents. Survey as many people as possible for the most reliable results.

Step 2: Competitors

Next, identify your competitors and assess their strengths and weaknesses, both in products and services, and operation of their business. Consider who else your typical customer might buy from and why. It pays to keep a broad mind when identifying competition. For example, if you design and make jewellery, competitors would include other jewellery makers and maybe different kinds of business selling goods that would make interesting gifts (if a lot of your jewellery is bought for other people).

You can gather a lot of competitive intelligence without spending a fortune. Whilst there are many things you and your competitors may not want to share with each other, competitors don't have to be sworn enemies. Talk to them, call or email them, visit their shop. There is much you can learn from them, you may even be able to help each other along the way.

HOW TO ... collect competitive intelligence

• Call competitors for information and prices. Visit their website, shop or stall, request brochures or other publicity and read it carefully. What kinds of customers do they get and what are they most interested in? How do they attract these customers? What kinds of sales are they making regularly? What special promotions or discounts do they offer? What promises do they make to customers?
• If they offer newsletters, get on their mailing list. You'll receive free information about new products, services, trends, improvements to their business/product/service, and even customer feedback. Make a purchase from them if you can, learn from the experience as a customer the ways in which you can improve your own customers' experiences.
• Keep up with current business and consumer publications such as magazines, newspapers and trade press. Look for any information about competitor activities, specialities or shortcomings; and potential market opportunities that you could benefit from. Don't forget to include the internet, there may be reviews and opinions of competitors online as well as general market information.

TIP: Don't think about what you can copy from your competitors. Copying from them could get you in trouble! Think about what you can learn from them and improve on. What can you offer people that sets you apart from the competition?

Step 3: Industry Environment

Besides customers and competition, you must also know about the industry environment you're trading in to maximise your revenue. There are many publicly available resources (free or for a minimal charge). It's just a matter of knowing where to look. Start by putting words such as names of competitors or products into a search engine (like www.google.co.uk or www.yahoo.co.uk).


Your local library (as well as any College/University business library) will have information about spending patterns, consumer demographics and industry trends. Libraries also have copies of old telephone directories that will tell you about local craft business addresses. You can see whether businesses have moved to new areas or expanded. You can find details of relevant trade and business associations and their publications, as well as Government publications from the Department of Trade and Industry; the Department of Culture, Media and Sport; local Chambers of Commerce and Business Link.

Many trade and industry organisations conduct detailed research into the economic state of their industry for the benefit of their members. They may also offer all kinds of resources to new businesses (you may need to join first), so it's well worth contacting any you think are appropriate to your business. Ask whether they have any research reports available, or a new business startup pack.

Turning a good idea into a great business isn't just about what you know, but who you know. Are there any local business associations or collaborations that you can get involved in? Is there any way you can co-operate with other small businesses to your mutual advantage?

HOW TO ... network

• Building a network of friends and business associates helps strengthen your understanding of your industry.
• Look out for trade or industry events like fairs, exhibitions or showcases and attend whenever you can.
• Read trade publications so you can hold your own in conversation.
• Give out business cards. Collect them too - you never know who you might need to call on.

When calling a contact for advice, make sure you're clear about what you want to know before you contact them. Introduce yourself clearly when your call is answered. Always be polite and courteous, even if they are unable or unwilling to help you at that time.

TIP: Try the websites and other sources at the end of this guide for market information.

Step 4: Testing the Market

If you launch a new product or service without testing the market first, it's unlikely to sell well. Part of the development process for something new should include market testing to establish whether it meets customers' needs. Show people your products or tell them about your services. Listen to their responses. Ask them what they'd be prepared to pay for your new items, or whether they think your price tag is justifiable.

HOW TO ... test the market:

• Display prototypes/new products/information on new services to existing or potential customers, and collect feedback from them to ensure your new product satisfies consumer needs.
• Look out for fairs, exhibitions, boot sales, festivals or other events with an appropriate audience for your business. Ask the organisers if you can participate, advertise/leaflet/flyer there, or conduct interviews (as appropriate).

TIP: When deciding on pricing strategy, think about your brand: What impression do you want to give people? What is the customer willing to pay? What can you afford to sell for? Is your product (and therefore your business) to be seen as exclusive (i.e. expensive) or good value (middle market) or a bargain (inferior quality)?

A final suggestion:

Internet discussion forums are extensive, archived, and on every imaginable subject. They can be searched for relevant posts. You could even start your own discussion. Always follow the host's code of conduct for forums: many recreational sites don't welcome postings of an overtly commercial nature (this usually includes mentioning your business name). However, questions like 'Where can I buy handmade purses around here?' and 'What do you think of the new shop on Wherever Street?' are usually perfectly acceptable. You can then ask further questions until you have the information you need. Remember to focus on comments from people who match your customer profile.

Links:

www.magportal.com free searchable articles database

www.marketresearch.com pay per report

See below for a list of sources of market information for designer-makers and crafts-based businesses

American Style Magazine

http://www.americanstyle.com

Craft art made in America

Arts Council England

http://www.artscouncil.org.uk

The national development agency for the arts in England. Links to Arts Council North West.

Arts Professional Online

http://www.artsprofessional.co.uk

Arts management magazine

British Chambers of Commerce

http://www.britishchambers.org.uk

Government resources for UK businesses, links to your local Chamber.

Business Insight

http://bestforbusiness.com/Homepage.aspx?id=248

Business information support services: Excellent table of links to online market research, statistics and surveys

Classic Stitches

http://www.classicstitches.com

Sewing magazine

Colored Stone

http://www.colored-stone.com
Jewellery makers' magazine

Community Arts North West

http://www.can.uk.com

Arts development organization based in Manchester

Craft Arts International

http://www.craftarts.com.au

International crafts magazine

Crafts Council Resource Centre Database

http://www.craftscouncil.org.uk/resources.htm

Information on over 700 organisations relating to contemporary craft: aimed at the individual designer-maker but also lists contacts useful to organisations, craft students and private individuals.

Crafts Magazine

http://www.craftscouncil.org.uk/crafts.htm

Crafts Council Decorative and Applied Arts Magazine (all craft forms)

Create and Decorate

http://www.createanddecorate.com

Craft and decorating project magazine

England's North West

http://www.culturenorthwest.co.uk

Local information and cultural news, business resources

Etcetera

http://www.eebeads.com/Webzine

Bimonthly webzine for artists and craftspeople

Excellence North West

http://www.northofenglandexcellence.co.uk

Improving the business performance of the North. Offers courses and networking events

Fiberarts Magazine

http://www.fiberarts.com

Contemporary textile art and craft

Interweave Press

http://www.interweave.com

Textile and fibre magazine, covers a range of crafts

Knitnet

http://www.knitnet.com

Online knitting magazine

Lapidiary Journal

http://www.lapidaryjournal.com
Trade magazine for lapidiary

Liverpool European Capital of Culture

http://www.liverpool08.com

Information about the arts and cultural industries in Liverpool.

Mintel Reports

http://reports.mintel.com

Global market research: full reports available for a fee but overview and press releases available free of charge.

Museums Libraries and Archives

http://www.mlanorthwest.org.uk

Connecting people to knowledge and information, creativity and inspiration.

Popular Woodworking

http://www.popularwoodworking.com

Woodworking magazine with searchable index of issues since 1982

Readymade

http://www.readymademag.com

"For people who like to make stuff"

Rebecca

http://www.rebecca-online.de/cont_en

Knitting magazine

Research Index

http://www.researchindex.org

Search engine for conducting research on the web.

Sew News

http://www.sewnews.com

Sewing discussion boards, forum, articles and news

Shopnotes

http://www.shopnotes.com

Helping you get the most out of your woodcraft shop

Space Magazine

http://www.spacemagazine.co.uk

Liverpool based premium lifestyle and fashion magazine

The Crafts Report

http://www.craftsreport.com

US Business journal for the crafts industry

The Sophisticated Stitcher

http://www.thesophisticatedstitcher.com

Needlework magazine

Thrift Deluxe

http://www.thriftdeluxe.com

"DIY for the hip"

UK Net Guide

http://www.uknetguide.co.uk/Entertainment

Arts and entertainment guide

Wire Artist Jeweller Magazine

http://www.wag.on.ca

Promoting professionalism in wire art jewellery.

Wood Magazine

http://woodmagazine.com

With furniture projects and news sections

Woodshop News

http://www.woodshopnews.com

News magazine for professional woodworkers

© 2006 MDA Ltd